View: Will India continue growing or break the line?

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Faster growth can come only with ‘deep reforms’, such as land acquisition and labour regulations.

India is far better off economically than it was five years ago. Fiscal management has been outstanding, and it has been clocking the highest growth rate among large economies.

Major reforms, such as goods and services tax (GST), Insolvency and Bankruptcy Code (IBC), and Real Estate Regulatory Authority (Rera) have been enacted. Infrastructure, financial inclusion and social reform campaigns have moved at a brisk pace. Doing business is easier, there is less corruption, more innovation. As a result, the individual citizen is better off than she was five years ago.

Despite this progress, however, India fares poorly when compared to its peers among the Brics (Brazil, Russia, India, China, South Africa) countries, never mind the developed OECD (Organisation for Economic Co-operation and Development) group. It also languishes in the UN Human Development Index (HDI).

Therefore, India’s journey to progress and prosperity is far from complete. At current growth rates of about 7%, it will take two more decades for India to reach ‘high income’ or ‘high human development’ country status.

Faster growth can come only with ‘deep reforms’, such as land acquisition and labour regulations.

Many commentators believe that India can transform itself without transformational leadership — that no matter what government comes, India will continue its march towards its manifest destiny. History, however, teaches that leadership matters — every nation that has transformed itself has needed a transformational leader for a considerable period, whether Kamal Ataturk in Turkey in the 1920s-30s, Franklin D Roosevelt in the US in the 1930s-40s, Lee Kuan Yew in Singapore from the 1960s to 1980s, Deng Xiaoping in China from the 1970s to 1990s, and Helmut Kohl in Germany from the 1980s to 1990s.

All of these leaders had the charisma, vision, integrity, pragmatism and execution skills to change the trajectory of their nations to such a degree that their leadership is considered ‘transformational’.

Among India’s leadership, Jawaharlal Nehru, Indira Gandhi and Narendra Modi exhibit some of the qualities considered to be that of transformational leaders.

In the absence of transformational leadership, countries progress to a certain extent, but then can either fall into the ‘middle income trap’ (e.g., Argentina, Brazil), or plateaus out before it can reach its peak (e.g., Japan).

India also has a ‘window of opportunity’ to seize, as China slows down, with the latter’s labour cost advantage diminishing and labourintensive industries seeking to relocate. Countries such as Indonesia, Vietnam and Mexico are aware of such opportunities. An example of India missing out on this because of lack of reforms or policy is the garment industry, where Bangladesh is now far ahead of us.

India is at a crossroad. It can either seize the opportunity to transform itself into a developed country over the next decade or two. Or it can continue with its ‘business as usual’ journey with its current growth rates. The continuing concerns about jobless growth and farmer distress are unlikely to be abated without ‘deep reforms’.

Seizing the opportunity will require transformational leadership.

Prime Minister Narendra Modi has laid the foundation. Other contenders to prime ministership are yet to show any track record that inspires confidence as an alternative. The Indian electorate has always chosen wisely. Whether it will do so again in 2019 remains to be seen.

Source : https://economictimes.indiatimes.com/news/economy/indicators/view-will-india-continue-growing-or-break-the-line/articleshow/68959249.cms

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